Family Financial Planning: Having the Money Talk With Aging Parents

Finances
Adult woman speaks with her mother outdoors on a sunny day: family financial planning

Talking about money can be uncomfortable, and when you need to discuss finances with aging parents, approaching the subject of family financial planning can be even more challenging.

Everything in life comes full circle: As our parents get older, the family roles often get reversed. Adult children frequently become their parents' caregivers as they age. And part of this caregiving responsibility involves understanding and protecting their parents' financial health.

If you've been hesitant to address the topic, here are some ways to begin the money talk to help ensure you and your family are adequately prepared to handle what may come in the future.

Make Time to Talk About Family Financial Planning

Conversations about money are often shrouded in our feelings about it and how we were raised to discuss (or not discuss) it. If you come from a family where your parents openly discussed finances — and made efforts early on to educate you about managing money — talking about their financial health may be a bit easier. If this wasn't the case for you, however, you'll need to be even more deliberate about how you approach the conversation.

First, schedule a time to talk to your parents. If they live nearby, map out what you want to say beforehand, inform anyone else who needs to be involved (like your siblings) and have the conversation in person. Tell your parents you've been thinking a lot about the topic lately — especially as you plan for your own family's financial future. Tell them you're having this conversation out of love and concern, and that you want to do right by them.

You can't control how anyone responds. Your parents may get defensive or feel like you're taking away some of their independence. The key is not to get defensive too. Give them time and space to share their feelings. It's a delicate balance, but you can't rush such a meaningful conversation.

It may even take several discussions to get to the point where your parents feel comfortable sharing financial information. However, if you start the conversation early, you should have some time to prepare for the future.

Gather Important Information From Aging Parents

Once your parents feel comfortable talking about their finances, ask several questions to get the information you need for planning purposes, including:

  • How would they like to divide their assets among you and your siblings, if applicable?
  • Do they plan to leave anything to their grandchildren, such as cash for college or physical assets? If so, how would they like these assets allocated?
  • Do they still owe money on their mortgage? If so, what's the balance and who is their mortgage lender?
  • Do they currently have a will? When was the last time they updated it, and where have they stored a copy?
  • If they don't have a will, will they instead consider a living trust so that everything is immediately transferred to their beneficiaries outside of the court or probate process?
  • What insurance do they have? Are the beneficiaries on their life insurance policy or other insurance policies up to date?
  • Do they have an advance directive or power of attorney in the event they become ill and can no longer make decisions for themselves? Who would they want to authorize as their power of attorney?
  • Where are all their relevant documents?
  • How would they like you to handle their burial arrangements when the time comes?

Gather essential personal information from your parents, including their Social Security numbers, birth dates, insurance information, contact information for their lawyer, accountants or financial advisor, password information, information for bank and retirement accounts, medical history, real estate information, estate planning documents and any relevant instructions.

Talk About Ways to Help Protect Their Money

Unfortunately, people often become targets for financial scams as they get older, according to AARP. Talk to your parents about potential red flags they should look out for, including health insurance and Medicare fraud scams, telemarketing scams and home repair or contractor fraud.

Talk to your parents about ways to spot potential fraud, including anyone who asks for their personal information or Social Security numbers over the phone. Adult children should also be leery of any new friend or previously distant relative who has become more involved in their parents' finances or care.

Keep an open dialogue with your parents and check in frequently to find out what's going on. If you suspect or have evidence of theft or elder financial abuse, don't hesitate to get law enforcement involved.

Some parents don't think they need to have a discussion about their finances with their adult children until they retire — or even at all. Even if your parents have carefully and diligently done their estate planning, you need to understand the preparations they've made. Waiting until there's an urgent situation or until they're no longer in the position to share this information can lead to a lot of confusion, stress and possible legal issues that could have been avoided with family financial planning. The money talk can be tricky, but it's a necessary conversation to have — for your sake and, more importantly, for your parents' future financial well-being.

IMPORTANT DISCLOSURES

Information provided is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. Western & Southern Financial Group and its member companies (“the Company”) does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.

Ready to Continue?

You have clicked a link to access information on a new website, so you will be leaving westernsouthern.com

Because this new site is independent, Western & Southern Financial Group neither manages nor assumes responsibility for its content. 

Are you ready to move forward?